SpaceX Stock Just Crashed — Here’s Why

Summary

Prof G Markets: SpaceX Stock Just Crashed — Here’s Why
Episode Date: June 24, 2026
Hosts: Ed Elson (Prof G Markets)
Guests: Gil Luria (Head of Technology Research, DA Davidson), Arindrajit Dube (Professor of Economics, UMass Amherst)

---

Episode Overview

This episode examines the dramatic decline in SpaceX’s stock following its recent public debut and $25 billion bond offering, situating this crash within a wider global tech and semiconductor sell-off. Hosts Ed Elson, with guest analyst Gil Luria, dissect what triggered the SpaceX plunge, broader AI market volatility, and why investor anxiety remains so pronounced. In the second half, economics professor Arindrajit Dube shares new research on the real effects of state minimum wage hikes, debunking common myths about wage policy and job loss.

---

Key Discussion Points & Insights

1. SpaceX’s Sudden Stock Crash (01:57–06:00)

• Market Context:

  • Tech stocks have plunged worldwide this week, with NASDAQ 100 down ~4% (shedding $1 trillion in two days).
  • Semiconductor companies are particularly hard-hit: companies like AMD, Nvidia, TSMC, and Broadcom all down 5–8%.

• SpaceX’s Plummet:

  • SpaceX issued a $25B bond offering to fund AI operations, triggering a 20% stock fall over three days.
  • Ed Elson underscores he isn’t surprised, referencing expectations of a “first day pop” followed by a correction.

• Quote (Gil Luria on Volatility):

  “The dispersion in outcomes for next year is bigger than it’s been in a while … anything, anytime something happens in AI that makes people more optimistic, these semi stocks continue to run, and anytime there’s a sense in the market of maybe we’re close to the top, then we get these big corrections.”
  — Gil Luria (03:35)

• Analysis:

  • The crash is attributed to heightened volatility around AI and tech, uncertainty of AI’s return on investment, and investor concern that SpaceX’s heavy bond financing reveals possible cracks in profitability.

---

2. What’s Going On With SpaceX? (04:19–07:07)

• New Business Model:

  • SpaceX has shifted from primarily Starlink revenue (~75%) to a focus on high-capacity “NEO cloud” AI data center contracts.
  • This new business is “incredibly capital intensive,” requiring vast investment in both terrestrial and space-based data centers.

• Investor Worries:

  • The bond offering, on top of a recent $85B equity raise, creates questions about where future returns will come from, reinforcing AI bubble fears.
  • No lock-up expirations have yet occurred, meaning more selling could come once early investors are freed to trade.

• Quote (Ed Elson):

  “It seems to be triggered by this $20 billion bond offering to finance the AI buildout … if we were to draw that to its logical conclusion, I assume that means investors are worried about the fact that they need to raise more money to spend more money on AI. Where is the return going to come from? Which goes back to AI bubble concerns.”
  — Ed Elson (05:18)

---

3. Tech & AI Valuations: Winners, Losers, and Inconsistencies (07:07–10:30)

• Tech Sell-Off:

  • Big Tech isn’t immune: Alphabet, Amazon, Microsoft, and Meta all seeing declines.
  • Some moves are company-specific (e.g., key AI talent leaving Google), but the sentiment is broader.

• Quote (Gil Luria on Google’s Talent Loss):

  “The two people that left Google for the Frontier Labs are two of the only people in the world that can understand AI right now … the fact that they said Google is so bureaucratic … is actually a sign that there’s maybe cracks in this notion that Google is the AI winner.”
  — Gil Luria (07:36)

• Investor Behavior:

  • Prefer investing in chipmakers over spending-heavy tech giants.
  • Wide discrepancies: Some AI stocks (like SpaceX, Cerebras) trade at 100x revenue, while Microsoft/Meta are at historically low P/E ratios.
  • Gil sees opportunity “to buy great companies like Microsoft, like Nvidia, like Micron, at attractive valuations. Because if this isn’t peak cycle, if this AI thing actually works out, those stocks will be a lot higher in a year or two.” (09:35)

---

4. Macro Environment & Rate Anxiety (10:30–11:38)

• Geopolitics and Rates:

  • Continued uncertainty (e.g., Iran situation) could impact oil, inflation, and ultimately trigger US rate hikes.
  • This cyclical risk overlays long-term AI/tech trends and intensifies market volatility.

• Quote (Gil Luria):

  “The market is of the mind that Iran will not be an issue going forward. Therefore, oil prices will remain low, inflation will remain low, and we will not need to increase interest rates. But that obviously … can change very quickly.”
  — Gil Luria (11:03)

---

5. The Reality of Minimum Wage Hikes: Evidence from 30 States (16:09–24:51)

Guest: Arindrajit Dube, Professor of Economics, UMass Amherst

• Setup:

  • Over the last 17 years, 30 US states have raised their minimum wage (avg. >$14/hr), while 20 remain at the $7.25 federal minimum (almost obsolete).
  • This creates a natural experiment: “It’s not a great way to set federal minimum wage … but it did mean that 30 states now have raised their minimum wage … This is a contrast.” (16:09)

• Key Findings:

  • Looking at the most affected sector (restaurants):
    • Wages in raised states are 8–9% higher than in states with no increase.
    • Restaurant jobs per capita have not declined—essentially unchanged since 2013.
    • The main argument that higher minimum wage kills jobs is not borne out in the data.

• Quote (Dube):

  “Restaurant pay in these 30 states today is maybe about on average like 8 or 9% higher than the other 20 states … What happened to jobs? We can look at restaurant jobs per capita. It is virtually the same today as it was in 2013 in these two states. So clear increase in wage, pretty much sideways change in jobs.”
  — Arindrajit Dube (18:03)

• Why This Is Possible:

  • Higher wages tend to reduce worker turnover, boost productivity, and are absorbed partly through prices (slightly higher for specific goods, minimally affecting state inflation).
  • Some reduction in firm profits, but “most people are tend to support having a higher minimum wage when understanding these are some of the trade-offs.” (22:19)

• Policy Takeaways:

  • Evidence is robust across multiple studies, including border-county comparisons and different sectors.
  • Dube calls for a federal minimum wage increase, ideally indexed to inflation to end long gaps (“We have the tools, we have the evidence, it’s a matter of having the political will.”) (23:03, 24:51)

---

6. Host’s SpaceX Prediction Recap (25:10–26:51)

• Track Record:

  • Ed Elson reminds listeners of his pre-IPO SpaceX call:
    • Predicted a 25%+ “first day pop” (stock rose almost 30%), then a post-IPO crash as lock-ups fall off.
    • “The stock has already fallen as much as 30% in just a few days. It also shed $400 billion in market cap in a single day, which was the second largest one day wipeout in stock market history.” (25:37)
    • Warns more downward pressure is coming when lockups expire and insiders can sell.

• Quote (Elson):

  “Aside from that, though, there’s not much to be excited about here. SpaceX is about to undergo some of the greatest selling pressures in history. We've already seen how a simple bond offering was enough to make investors nervous. Now just imagine how nervous they will be when the insiders start to sell.” (26:34)

• Nasdaq Inclusion:

  • One short-term positive: $8B of index fund demand arrives in two weeks as SpaceX enters the NASDAQ 100.

---

Notable Quotes & Moments

• On Market Volatility:

  “…If AI goes well, GDP in the US may grow 5% next year. If AI rolls over… GDP may only increase by 1 or 2%. Usually we’re trying to figure out if GDP is going to grow 2.8 or 3.2. Right now the range of outcomes is really big.”
  — Gil Luria (03:35)

• On Google’s AI ‘Cracks’:

  “…the fact that they said Google is so bureaucratic that Google DeepMind will not lead us to superintelligence… is actually a sign that there’s maybe cracks in this notion that Google is the AI winner.”
  — Gil Luria (07:36)

• On Real-World Minimum Wage Data:

  “…this is one of those cases where it’s actually pretty straightforward. You just look at these 30 states, look at these 20 states… plot what happens to their wages, plot what happens to their share of people who are working. And it turns out that tells us a pretty compelling story.”
  — Arindrajit Dube (16:09)

---

Timestamps for Key Segments

• Market Overview & Tech Sell-Off: 01:57–03:35
• SpaceX Stock Crash & Analysis: 03:35–07:07
• Big Tech, AI Valuations, & Talent Exodus: 07:07–10:30
• Interest Rate & Geopolitical Risk: 10:30–11:38
• Minimum Wage Natural Experiment: 16:09–24:51
• SpaceX IPO Prediction Recap: 25:10–26:51

---

Takeaways

• SpaceX’s stock crash is a symptom of heightened volatility and skepticism around AI’s return on investment, exacerbated by heavy capital raises and sector-wide tech uncertainty.
• Big Tech faces a confidence gap despite stable revenues, largely due to massive AI spending, talent losses, and inconsistent market beliefs about the sector’s future.
• Real-world evidence shows raising minimum wage increases pay without reducing jobs (at least in the restaurant sector), debunking the core argument against higher minimum wage.
• Policy inertia in Washington is the main barrier to raising the federal wage floor, not a lack of economic evidence.
• More market volatility is expected for SpaceX as lock-up periods end, with temporary relief likely from impending NASDAQ index inclusion.

---

This summary captures all major themes and critical discussion points, prioritizing real quotes, analysis, and concrete timestamps for easy reference. It is designed to be accessible for listeners at all levels, while maintaining the straightforward, no-BS tone of the show.

Transcript

[Ed Elson]

Support for the show comes from Odoo. Running a business takes everything you've got. And a lot of the tools out there that are supposed to make your life easier just aren't great at talking to each other. And that means you end up having to toggle between a dozen different apps and services just to keep the lights on. Enough of that. Now there is Odoo, the all in one fully integrated platform that might actually help you get it all done. Thousands of businesses have made the switch, so why not you try Odoo for [e-mail] that's O-.

[Unidentified Speaker 1]

When I got a new car, I

[Unidentified Speaker 2]

thought my insurance premium would increase and empty my bank account like if fatween won the lottery.

[Unidentified Speaker 1]

I've invested most of my winnings in chicken tenders because they're bomb, but bro, I bought a house and it's sick, bro. I'm thinking the floor is gonna be all trampoline, bro, with the helipad on the roof, the contractor said it's structurally unsound, but they're just being babies.

[Unidentified Speaker 2]

But switching to Geico saved me hundreds, so my bank account is safe.

[Gil Luria]

It feels good to save some hard earned cash.

[Ed Elson]

It feels good to Geico.

[Unidentified Speaker 2]

Feel like you're being told to wave a magic AI wand and everything will just get better. Sure, AI can chat and summarize, but what about big business problems like rerouting stock through a canal that won't unblock Enterprise AI needs context for that, so Celonis provides it. The Celonis context model gives AI operational clarity so agents know how your unique business runs and how to improve it. Meet the model at C-E L O-N I S.com context.

[Unidentified Advertiser 1]

Money market matter.

[Gil Luria]

If money is evil, then that building is hell. The show goes on.

[Ed Elson]

Welcome to Profg Markets. I'm Ed elson. It is June 24th. Let's check in on yesterday's market vitals. The major indices declined as tech stocks dropped around the world. More on that in a moment. Meanwhile, oil continued its decline and finally, the dollar hit its highest level since November on growing expectations for rate hikes this year. Okay, what's happening? Tech stocks are selling off and the pain is hard to ignore. So far this week, the NASDAQ 100 is down roughly 4%, meaning that the index has shed over a trillion dollars in the last two days alone. Chip makers are among the hardest hit, with an index of semiconductor companies dropping 8% yesterday. The route has gone global too, with Asian stocks taking a steeper dive. South Korea's kospi is down 10% from near record highs. But the biggest drop we've seen was SpaceX. The company issued a $25 billion bond offering to finance its AI operations and over the past three days the stock has fallen around 20%. So for more on this latest drawdown in the tech market, we're speaking with Gil Luria, Head of Technology Research at DA Davidson. Gil, good to see you. A lot of pain in the tech sector at the chip stocks especially. AMD's down 5% this week. Nvidia is down 5.5%, TSMC and Broadcom down 8%. What is going on here? Why are investors so concerned right now?

[Gil Luria]

I characterize it as a lot of volatility. The dispersion in outcomes for next year is bigger than it's been in a while. If you think about it, if AI goes well, GDP in the US may grow 5% next year. If AI rolls over and the cycle is over, GDP may only increase by 1 or 2% next year. Usually we're trying to figure out if GDP is going to grow 2.8 or 3.2. Right now the range of outcomes is really big. So anything, anytime something happens in AI that makes people more optimistic, these semi stocks continue to run and anytime there's a sense in the market of maybe we're close to the top, then we get these big corrections. So most of what we're seeing right now is just tremendous volatility.

[Ed Elson]

What do you make of what's happened with SpaceX here? I mean, we talked about it last time, I think we talked before it went public, or at least maybe in the first few days. And it's been kind of a stunning drawdown. I'm not personally that surprised by it because I mean, I kind of thought this had to happen eventually. But what do you mean?

[Gil Luria]

You were very vocal about that. You were very vocal and I think that was very helpful to investors going in, that you spent a few days preparing investors that there's going to be a first day pop which happens and then that the stock may come down from there. And that's happened without all those things that we talked about last week, which is there's going to be shares unlocked and there's going to be a lot of activity around index inclusion and non index inclusion. So another place where we're going to see even more volatility. But thankfully you did prepare at least your viewers and listeners for this outcome on that point.

[Ed Elson]

We haven't seen those lockup expirations yet. I mean, this is as you say it seems to be just pure volatility and it seems to be triggered by this $20 billion bond offering to I guess finance the AI buildout. I mean, if we were to sort of draw that to its logical conclusion, I assume that means something like investors are worried about the fact that they need to raise more money to spend more money on AI. Where is the return going to come from? Which goes back to AI bubble concerns. Where is the ROI on this technology? Do you think that that is sort of fueling the anxiety here? Is that what is ultimately triggering people's decision to sell?

[Gil Luria]

Yeah, all these things are contributors to this. I mean, they just went out and raised $85 billion in equity capital and now they're raising another 25 of debt. Now some of it is to pay other loans, some of it may not be. Either way, they need to invest very substantially in this AI compute. Now, to be fair to them, this is a business that's in tremendous transformation right in front of our eyes, right from a business that had most of its revenue from Starlink and then about a quarter of the revenue from space exploration. Now with the anthropic Google and reflection contracts, most of their revenue is coming from a NEO cloud business, from any data center capacity to AI labs. So their business is completely different than it was a year ago. This business, the business that is now their biggest business, this NEO cloud business, is incredibly capital intensive. So they do need a tremendous amount of capital. Now part of this is they're monetizing existing data centers, but they also want to build a lot more data centers, not to mention they want to build some of them in space.

[Ed Elson]

What do you make of what's happened to big tech in the sell off as well? Because they've really been dragged into this. Alphabet had a pretty significant sell off. That was maybe a different story because a couple of their AI researchers left the company and then went over to a competitor, which got a lot of investors concerned. But Also Amazon's down 3% this week, Matter down 2%, Microsoft down as well. What do you make of big tech valuations and what is their role in this, in this story?

[Gil Luria]

So the sentiment around those companies is they're spending too much money. They're not going to get the return. We would rather invest in the companies that they're spending on, so mostly chip companies as opposed to the companies that are spending their cash flow on those chips. And that's what the market is reacting to now. But I wouldn't, I would say that the Google changes are Actually very important. The two people that left Google for the Frontier Labs are two of the only people in the world that can understand AI right now. You can really count. The people in the world that can figure out how to develop a better model is probably less than 100 people globally. And the two that left Google are probably top 10. So the fact that they said Google is so bureaucratic that Google DeepMind will not lead us to superintelligence, we should go to OpenAI and anthropic is actually a sign that there's maybe cracks in this notion that Google is the AI winner, which is how it got from a stock in 180 to stock over 350. So that's specific to Google. But broadly speaking, investors don't believe the returns are coming. It doesn't matter that Amazon, Microsoft and Google are telling us, of course the returns are coming. We've already sold this data center capacity, we know where it costs, we know we have a markup, we know we have a return. Investors are just not buying that right now.

[Ed Elson]

How do you sort of justify or explain what's going on in terms of just the delta between some of the valuations that we're seeing in AI, which are certainly overpriced? I mean SpaceX would be sort of ground zero. The perfect example, trading at, you know, 100 times revenue, last year's revenue. But then there are also companies like Microsoft, like Meta, and that they're price to earnings multiples are historically quite low right now. I mean, how do we sort of make sense of this market if you have this massive difference between all of these different players in AI, the market is being inconsistent.

[Gil Luria]

The valuation of Nvidia, Microsoft, Micron, and to some extent Amazon is a valuation that implies that this AI thing isn't going to work out and we're at the peak of the cycle and it's going to roll over next year. The valuation of Cerebras and OCLO and all these optical companies implies that an intel implies that the cycle will continue through 2030. So the market is being inconsistent right now because the people that don't believe that in AI are unwilling to buy those big companies. But then the people that do believe in AI are only buying the marginal AI participants. We see that as an opportunity to buy great companies like Microsoft, like Nvidia, like Micron, at attractive valuations. Because if this isn't peak cycle, if this AI thing actually works out, those stocks will be a lot higher in a year or two.

[Ed Elson]

Do you have any concerns about what we're seeing in the macro environment specifically. I mean, it's kind of amazing and remarkable the fact that what's happening in Iran does ultimately affect a lot of these names because ultimately it could mean higher interest rates if we do see rate hikes, which is probably one of the biggest anxieties for investors on Wall street right now, and no one seems able to agree. Are you looking at interest rates? Are you concerned about interest rates, especially as it relates to those names and whether or not they are buying opportunities?

[Gil Luria]

Oh, absolutely. And right now, again, the market is of the mind that Iran will not be an issue going forward. Therefore, oil prices will remain low, inflation will remain low, and we will not need to increase interest rates. But that obviously, as we've noticed over the last four months, can change very quickly. And so we absolutely have to keep an eye on that because that would be the major impact at a cyclical level. And then the AI trend we're talking about is a secular trend. But overlaid on all that is the cyclical aspect of it, which is very much impacted by inflation and the need to raise interest rates possibly.

[Ed Elson]

Gil Luria is head of technology research at DA Davidson. Gil, really appreciate your time. Thank you.

[Gil Luria]

Thank you.

[Ed Elson]

After the break, a closer look at the minimum wage. And for even more markets insights, you can subscribe to my weekly newsletter. Simply put, at simplyput. Prof. Gmedia.com. Support for the show comes from Odoo. Running a business is hard enough, so why make it harder? With a dozen different apps that don't talk to each other, one for sales, another for inventory, a separate one for accounting. Before you know it, you are drowning in software. Instead of growing your business, this is where Odoo comes in. Odoo is the only business software you'll ever need. It's an all in one fully integrated platform that handles everything. CRM, accounting, inventory, E commerce, HR and more. No more app overload, no more juggling logins. Just one seamless system that makes work easier. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business whether you are just starting out or already scaling up. Plus, it is easy to use, customizable and designed to streamline every process so you can focus on what really matters running your business. Thousands of businesses have made the switch, so why not you try Odoo for free at odoo.com that's O-O-O.com.

[Unidentified Advertiser 2]

Support for the show comes from LinkedIn ads. There's no worse feeling than making a major investment in something only to realize it didn't exactly live up to the hype, such as buying a nice piece of tech that ends up in storage, collecting dust, or taking a business workshop where your main takeaway was little more than a few motivational words. If you work in marketing, this can happen with ads. You optimize for the numbers that look great, impressions, reach and reactions. But when they don't show revenue, well, that can turn into an unfun conversation with with the CFO. LinkedIn has a word for that bullspend. Reach the right buyers from LinkedIn ads and invest in what looks good to your CFO. According to the 2026 Dream Data Benchmark report, LinkedIn ads generated the highest ROAS of all major ad networks. It's 121% you can target by company, industry, job title, and more. It's time to cut the bull. Spend advertise on LinkedIn, the network that works for you. Spend $250 in your first campaign on LinkedIn ads and get a $250 credit for the next one. Just go to LinkedIn.com Scott that's LinkedIn.com Scott Terms and conditions apply.

[Unidentified Speaker 3]

We've all been there. You pop into the shop for five minutes and all of a sudden you've forgotten where you parked.

[Aaron Dube]

Car.

[Gil Luria]

Car.

[Unidentified Speaker 3]

Unfortunately, that lost feeling is what it's like trying to manage your policy with other insurers here.

[Aaron Dube]

Car Come out, come out, wherever you are, please.

[Unidentified Speaker 3]

With Geico, you can use the app to easily manage all your policies in one place.

[Aaron Dube]

Did this parking lot have a waterfall?

[Unidentified Speaker 3]

I think you've wandered too far, mate.

[Gil Luria]

It feels good to find what you're looking for.

[Ed Elson]

It feels good to Geico. We're back with Prof. G markets. It's been 17 years since the US last raised the minimum wage, but while Washington stood still, much of the country moved forward. 30 states have increased their minimum wage, while 20 still use the federal floor of $7.25. Our guest today realized that a natural experiment was going on across the country. So he asked what happened to pay employment and local economies where wages went up and what can those real world experiments tell us about whether and how the federal government should raise the minimum wage? Today, joining us to discuss his findings, we're speaking with Aaron Dube, Provost professor of Economics at the University of Massachusetts Amherst and author of the Wage what's Wrong in the Labor Market and How to Fix It. Aaron, thank you so much for joining us on the show. You have been studying minimum wage policies across the country. You pointed out a simple and important point, which is that we've experimented with this at the state level. What were your findings?

[Aaron Dube]

You know, as I like to sometimes say, the silver lining of dysfunctional policymaking is that they provide us with natural experiments. So it's not a great way to set federal minimum wage to let it not, you know, change for over 17 years. But it did mean that 30 states now have raised their minimum wage on average. Today those 30 states have something a little like a little over $14 an hour minimum wages. In contrast the other 20 states, the minimum wage remains 725. That is so low, by the way, that it's essentially like not having a minimum wage because very few people actually get paid that little. So we're basically for the first time since the 1930s when we first introduced the minimum wage, we have like a little less than half the country with no minimum wage versus the other half sometimes with fairly strong minimum wage, maybe even the levels of close to UK or France. So this is a contrast. And so what I did is to look to see this is really simple, you know, sometimes getting causal evidence of any policy or any something like that, which we economists, you know, spend a lot of time trying to figure out. It's hard, it's hard work and people disagree, etc. But this is one of those cases where it's actually pretty straightforward. You just look and look at these 30 states, look at these 20 states, just plot what happens to their wages, plot what happens to their share of people who are working. And it turns out that tells us a pretty compelling story.

[Ed Elson]

So one of the things that we hear a lot about on why we shouldn't raise the minimum wage is that it's going to be a problem for employment, that if you, if you basically force employers to pay employees more, then fewer people will be employed. What did your data find on that front?

[Aaron Dube]

Yeah, so just as a, as a way of thinking about this, if we have a really well functioning market, labor market, where companies are really competing hard for workers, if suddenly the government comes in and sets wages even higher than what companies are paying, some jobs will be lost because companies are just not going to be willing to hire those individuals. At the same time, if the market is not quite working that way and the market has. Here's a funny word that economists use, monopsony power, which means that employers have some degree of choice. Should I pay a higher wage and have lower quits and easier recruitment, or should I pay a lower wage and Save on labor costs, but then have higher quits and harder time recruiting in such a market. A higher federal or higher minimum wage could end up not killing jobs, but killing vacancies and reducing turnover. So then it becomes an empirical question. And so here's what we found. So when, when I look at this 2010-2025, okay, a broad set of 15 year period in the states that raise their minimum wage. If you take the most impacted sector, that's restaurants, okay, this is the low wage sector. A sizable portion of the minimum wage workforce work at restaurants. Restaurant Pay in these 30 states today is maybe about on average like 8 or 9% higher than in the other 20 states. Okay, than that it then it was say compared to 2013 before this gap emerged. So very clear wage growth in these 30 raised states compared to the 20 states that stayed put. What happened to jobs? We can look at restaurant jobs per capita. It is virtually the same today as it was in 2013 in these two states. So clear increase in wage, pretty much sideways change in jobs in the most highly impacted sector, restaurants.

[Ed Elson]

In other words, the main argument against the minimum wage, which is that it causes low and lower employment, we have evidence that is actually not true, at least in the states that we have looked at. Which makes me.

[Aaron Dube]

That's right, yeah.

[Ed Elson]

It makes me wonder is there any valid argument against raising the minimum wage? And it doesn't seem to be the case.

[Aaron Dube]

There's a number of things to think about. So one thing I will say is that by the way, this is the simplest comparison, but of course we can make fancier comparisons. And other work that I have done, I've said, well maybe there are different things going on. We can compare just neighboring counties, just one side of the border raised it, another didn't. So very similar otherwise. And I show this in the substack post, you can compare the neighboring counties across the state line. Again, clear change in wage, absolutely no change in relative employment. And the two sides. And there are other things you could do. You could look at broader set of industries of low wages, et cetera. And the story doesn't change. Now what. So how do employers actually absorb this? And, and that actually gets to an important thing to recognize. And so I, I talk about this in the book called the Three Ps. So first of all there's some productivity offsetting. Higher wage does increase productivity in a couple different ways and that doesn't pay for itself, but it does offset some of the cost in higher wages. Then there's some reduction in profits. But Then the final piece is prices. And here it is true that a higher minimum wage does lead to somewhat higher prices for particular goods and services, particularly like a burger may cost a bit more. If you look at the overall cost of living in a state, it is not visibly affected by a minimum wage, but particular things may cost a bit more in order for lower wage workers to have a higher pay. So that's kind of the way we can think about how the minimum wage actually gets absorbed. You know, most people are tend to sort of support having a higher minimum wage when understanding these are some of the, you know, trade offs that we may face.

[Ed Elson]

What do you think is the next step here? Because it seems like we have a solid body of evidence demonstrating that all of the fears that we had, that some may have had around the minimum wage being raised are not actually true. And now, I mean, we have clearly a cost of living crisis in the country, increasingly an affordability crisis. It seems like this might solve a lot of those problems, simply raise the federal minimum wage. And therefore we would see more wage growth as demonstrated in the evidence that you've laid out, especially among the lowest earners. And perhaps it might start to solve our problems. I mean, is the next step taking this to the federal government and raising the federal minimum wage?

[Aaron Dube]

It's certainly the case that lack of wage growth is a big part of the affordability crisis. And so finding ways of raising wages is key. And that's why sort of I wrote the book. And one of pillars that I argue is exactly raising the minimum wage. The other one, by the way, is full employment, which also plays a very important role in helping giving more leverage to workers. But when we think about raising the minimum wage at this point, the federal minimum wage has been stagnant, like we said, for 17 years. So it is absolutely critical that we do raise it. You know, it's actually, it's something that there's a broad base of support in this country for, for doing this. And the problem is really in Washington. And so of course we can keep raising more state minimums. That, that is something that, you know, I think we'll probably continue to see efforts. But at the end of the day, not all states, you can actually put this on the ballot. And sometimes there's, you know, different factors that affect what kind of what legislatures are going to do. And this is why it's really critical for the federal government to do and actually have a minimum wage. And the key thing will be the next time we raise the federal minimum wage, we should make sure. We do not let this happen again where we go for over a generation. And there's a really simple fix, which is you index the minimum wage, which many states increasingly do so every year it's automatically raised. It doesn't require us to debate this ad nauseam, you know, over and over again and just let it, let it do its job. And so I think we have the tools, I think we have the evidence. I think it's a matter of having the political will.

[Ed Elson]

Aaron Dube is Provost professor of Economics at the University of Massachusetts Amherst and author of the Wage what's Wrong in the Labor Market and How to Fix It. Professor Dube, we really appreciate your time and I'm in full support and full agreement. So thank you.

[Aaron Dube]

Thanks for having me. Great to be here.

[Ed Elson]

As we end this episode, a quick check in on my SpaceX prediction. Two weeks ago, before SpaceX went public, I predicted that the stock would rise at least 25% on the first day of trading. That it did. The stock hit $176 on day one, up almost 30%, and then continued to rise the following week, hitting a high of nearly $220 per share. So check part two of my prediction, however, was that over the next six months, the stock would get cut in half. Why? Because I believed, and still believe that the valuation makes no sense. And also because billions of dollars worth of lockups would soon expire, thus allowing early investors to sell their shares, thus putting downward pressure on the stock. That hasn't happened yet. However, we are starting to see warning signs. The stock has already fallen as much as 30% in just a few days. It also shed $400 billion in market cap in a single day, which was the second largest one day wipeout in stock market history. And while it did recover some losses Yesterday, it's still 22% off of its highs. Now, keep in mind, this is all happening before any of the lockups have even expired, which means that the stock has yet to go through the real test, which is when thousands of investors will choose whether to hold the stock at an unreasonable valuation or sell it and then go buy themselves a house or a boat or perhaps even a plane. I know what my money's on. Having said that, there is one bright spot ahead for SpaceX, and that is when it will be officially included in the NASDAQ 100 index. That means that roughly $8 billion worth of SpaceX shares will be automatic purchased by passive investors, thus temporarily increasing demand. And that is set to happen in about two weeks. So that's the good news for SpaceX. Aside from that, though, there's not much to be excited about here. SpaceX is about to undergo some of the greatest selling pressures in history. We've already seen how a simple bond offering was enough to make investors nervous. Now just imagine how nervous they will be when the insiders start to sell. Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Shalan, Isabella Kinsel, Kristen o' Donoghue and Mia Silverio. And our social producer is Jake McPherson. Thank you for listening to Profigy Markets from Profigy Media. If you liked what you heard, give us a follow up. I'm Ed Elson. I will see you tomorrow.

[Unidentified Speaker 3]

We've all been there. You pop into the shop for five minutes and all of a sudden you've forgotten where you parked.

[Gil Luria]

Car.

[Aaron Dube]

Car.

[Unidentified Speaker 3]

Unfortunately, that lost feeling is what it's like trying to manage your policy with other insurers here.

[Ryan Reynolds]

Car.

[Gil Luria]

Come out, come out, wherever you are.

[Unidentified Advertiser 2]

Please.

[Unidentified Speaker 3]

With Geico, you can use the app to easily, easily manage all your policies in one place.

[Aaron Dube]

Did this parking lot have a waterfall?

[Unidentified Speaker 3]

I think you've wandered too far, mate.

[Gil Luria]

It feels good to find what you're looking for.

[Ed Elson]

It feels good to Geico.

[Unidentified Advertiser 1]

The right window treatments change everything. Your sleep, your privacy, the way every room looks and feels. @blinds.com, we've spent 30 years making it surprisingly simple to get exactly what your home needs. We've covered over 25 million windows and have 50,000 five star reviews to prove we deliver. Whether you DIY it or want a pro to handle everything from measure to install, we have you covered. Real design professionals, free samples, zero pressure right now. Get up to 50% off with minimum purchase. Plus get a free professional [e-mail] rules and restrictions apply.

[Ryan Reynolds]

Ryan Reynolds here from Mint Mobile with a message for everyone paying big wireless way too much. Please, for the love of everything good in this world, stop with Mint. You can get premium wireless for just $15 a month. It of course, if you enjoy overpaying. No judgments. But that's weird. Okay, one judgment anyway. Give it a try at mintmobile. Com.

[Unidentified Speaker 2]

Switch upfront payment of $45 for 3 month plan equivalent to $15 per month required intro rate first 3 months only, then full price plan options available, taxes and fees extra. See full terms at mintmobile. Com.